Fiscal Policy, Institutional Quality and Central Bank Transparency

Meixing Dai (), Moise Sidiropoulos and Eleftherios Spyromitros

Manchester School, 2015, vol. 83, issue 5, 523-545

Abstract: type="main">

This paper examines monetary and fiscal interactions in a framework where the government as Stackelberg leader worries about political costs of corruption and central bank opacity acts as a fiscal disciplinary device. Opacity could reduce (increase) inflation expectations, inflation (the output gap) and the responses of these variables to supply shocks, and would improve social welfare. Under the least favourable assumptions on the effect of corruption, i.e. ‘sanding-the-wheels’ or weak ‘greasing-the-wheels’ effect, opacity has a fiscal disciplining effect that could be reinforced by grand corruption. Intransparency increases corruption only if the ‘greasing-the-wheels’ effect is relatively large.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://hdl.handle.net/10.1111/manc.12067 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Fiscal policy, institutional quality and central bank transparency (2014)
Working Paper: Fiscal policy, institutional quality and central bank transparency (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:manchs:v:83:y:2015:i:5:p:523-545

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1463-6786

Access Statistics for this article

Manchester School is currently edited by Keith Blackburn

More articles in Manchester School from University of Manchester Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().